Independent Pharmacies

5 Key Benefits of EDI Integration for Your Pharmacy

Datarithm Team November 08 2022

Your pharmacy's biggest investment is inventory—but the amount of time you spend managing it may be lopsided. Pharmacists report spending, on average, at least one hour each day managing inventory: searching for needed items, price shopping, manually placing orders, verifying received orders, and restocking shelves. And while it may feel different than the time you spend during the other parts of your day, that time is still worth something: with an average hourly wage of $58.82 an hour (2019 NCPA Survey of Hourly Wages), those inventory hours add up to $1,176 a month—and over $15,000 per year. 

The biggest reason for all those hours? The manual nature of placing and processing orders, including the back and forth with your wholesalers. There's the searching and price shopping, then waiting around to hear if your item's in stock, then again for your order confirmation, and again to receive your invoice and send payment until your order can be processed and move on to shipment.  

Fortunately, inventory also represents your pharmacy's biggest area of opportunity for time and  cost optimization: according to PBA Health, "every  1 percent change in an average pharmacy’s costs of goods can shift profits by 20 percent."

Being able to run your inventory more efficiently, with less time spent on managing inventory and faster turnaround, means a healthier bottom line, better cash flow, and better long-term security for your business. And it can be the difference in a better work-life balance for you. 

It may sound too good to be true, especially after one too many nights of spending hours on ordering, but there is a better, more efficient way. By integrating EDI (electronic data interchange) with your pharmacy management system, you can automate more of the ordering process, cut down on turnaround time, reduce errors, save money, and free yourself up to spend more time on more impactful parts of your job and life. 

What is EDI? 

EDI stands for electronic data interchange as it works bi-directionally so both your PMS and your supplier's system can talk to each other. Using standardized communication, you can securely automate more of your ordering process and see items on your shelves far faster. 

Instead of going to each wholesaler's website, with EDI, you use your pharmacy system to place your orders.  

Here's how it works:

  1. With your system receiving data from your suppliers, you can simply search for what you need within it. 

  2. If you want to price shop, you can pull up a price file, find what you want, then make your purchase--no phone calls, no faxes, and no leaving your PMS. 

  3. Once you click submit, your order (called an 850) is placed automatically. 

  4. When your supplier's system receives your order through EDI, it immediately kicks back a confirmation of your PO (called an 855) to your pharmacy system.  

  5. This automatic submission means your order moves straight into the shipping process. Your supplier can immediately start working on fulfilling and shipping your order, versus sending you back an invoice first, then waiting until you pay that invoice to process your order and begin shipment. 

  6. Your supplier's system will also send you a notice, called an 857, via EDI, that lets you (and your PMS) know about any substitutions to expect in your tote. 

  7. You'll also receive an Advanced Shipping Notice Code, that includes your tracking number, shipment method, estimated delivery date, and a Sales Invoice Code (called an 810). 

  8. When you pay your invoice, your system sends a Payment Order Code (called an 820) to your supplier.

What Are the Benefits of EDI Integration for Your Pharmacy? 


EDI Saves Time and Money 

EDI greatly reduces order placement and turnaround times. It can even save you a tremendous amount of time intaking your shipments by automatically receiving shipment tote quantities into your PMS, which helps keep your on-hand accurate and updated.  

Because EDI improves transaction times, you can also minimize your order sizes and reduce your holding costs without having to worry about running out of an item before you're able to order a replacement. Keeping only items on hand that you need helps reduce risky surplus and frees up your cash flow. 

It Reduces Errors 

By reducing the back and forth with your supplier, EDI helps reduce errors in the ordering process. When you link EDI integration with your pharmacy management system, you gain accurate data about your inventory levels, at any point.  

By automatically receiving shipment tote quantities into your PMS,  for example, EDI helps keep your on-hand accurate and updated. This should eliminate the need to put your hand on every jar that comes in every tote. No more scanning every bar code individually to update your PMS. Instead, it matches and finds discrepancies, enabling you to correct them and load the updates in your system automatically.  

EDI is Secure 

Your transactions through EDI are secure, thanks to high security compliance standards and communications protocols. 

It Simplifies Paperwork (While Decreasing Actual Paper Use) 

Paper trails get messy. EDI minimizes the amount of actual paper, and instead, your records can be standardized and organized right in your pharmacy management system. Digitalizing more of your paperwork also helps you run a more sustainable business. 

EDI is Flexible 

Since EDI works both ways, it's also flexible: for example, you can try it out by continuing to place orders manually but choose to receive EDI back from your wholesaler, which will still cut down on turnaround time and errors.  

Link Perpetual Inventory with EDI to Maximize Your Pharmacy's Time and Cost Savings.

When you automate with EDI and Perpetual Inventory, you can step back from all the manual inventory management, and step into the other parts of your job and life. In the Guide: How to Link Perpetual Inventory with EDI to Maximize Your Pharmacy's Time and Cost Savings, we walk you through the benefits of each on their own, plus how they work together like an automated symphony to really maximize your savings and free up cash flow.

Guide: How to Link Perpetual Inventory with EDI to Maximize Your Pharmacy's Time and Cost Savings; download now

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